DAILY REVIEW 16 Aug 2013

EU: Daily candle is a large-spread (157pips) bull closing near the high on above-average vol>8days. The volume and the close suggests more upside. However, we note that today is Friday and mid-month. SM has taken out 3 days of price action by removing weak longs and shorts. I was listening to news and the news reader said that there was no known reason for the push up except that trading volume was very thin. We have to realize that many traders that got wiped out of their positions would not be in a hurry to get back in.  SM is keeping price in a tight range during Asia so far. SM is likely to create selling pressure to remove weak longs before reversing to test the supply zone at 1.3400, the move would probably be a deeper one, given that there were few market participants in the markup and a lot of traders will be thinking short. Again, broker platforms show short positions increased.

EU long levels:   1.3315, 1.3300, 1.3281, 1.3260, 1.3245, 1.3220 EU short levels:  1.3400, 1.3450, 1.3510

GU: The daily candle is a bull candle of wide-spread (155pips) closing slightly off the high on high volume >5days There is daily bearish volume divergence. Just like the EU, SM marked up prices yesterday “with no basis”. SM will likely create selling pressure to remove weak longs from the market before reversing back upwards. I believe the retracement can be deep given that there is a daily volume divergence yesterday which simply says that SM used less volume to move prices up to those levels. However, given that even though the volume has diverged, it is still high. That suggests that SM will be reloading to push up again. We have seen this many times this week as most surges were news-based. There is some US news today that may help the upward movement later but it may also keep falling for SM to take profits.

Having said that, the supply level 1.5720 – 1.5750 is now well within striking distance.

GU long levels:  1.5600, 1.5580, 1.5555, 1.5540, 1.5520  GU short levels:  1.5675, 1.5727, 1.5750